Residential Issues and Trends Forum 2016, Washington DC

LINDA LEEChair, Residential Economic

Issues and Trends Forum

CHRISTIAN ZARIFVice Chair, Residential

Economic Issues and Trends Forum

HOUSING AND ECONOMIC OUTLOOKLAWRENCE YUN, PH.D.

CHIEF ECONOMISTNATIONAL ASSOCIATION OF REALTORS®

PRESENTATION IN WASHINGTON, D.C.

MAY 12, 2016

EXISTING HOME SALES – MODERATE RECOVERY

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

NATIONAL PENDING SALES INDEX – GOOD SIGNS

(SEASONALLY ADJUSTED)

2014 - Jan

2014 - Feb

2014 - Mar

2014 - Apr

2014 - May

2014 - Jun

2014 - Jul

2014 - Aug

2014 - Sep

2014 - Oct

2014 - Nov

2014 - Dec

2015 - Jan

2015 - Feb

2015 - Mar

2015 - Apr

2015 - May

2015 - Jun

2015 - Jul

2015 - Aug

2015 - Sep

2015 - Oct

2015 - Nov

2015 - Dec

2016 - Jan

2016 - Feb

2016 - Mar

70.075.080.085.090.095.0

100.0105.0110.0115.0

Source: NAR

REGIONAL PENDING CONTRACTS(% CHANGE FROM ONE YEAR AGO TO MARCH)

Northeast Midwest South West

-10

-5

0

5

10

15

20

REGIONAL MEDIAN PRICE CHANGE (3-YEAR PRICE CHANGE FROM 2012 TO 2015)

Northeast Midwest South West05

10152025303540

HOUSING AFFORDABILITY INCOME GAPAT 3.8% MORTGAGE RATE


100002000030000400005000060000700008000090000

Actual IncomeQualifying Income

HOUSING AFFORDABILITY INCOME GAPAT 6% MORTGAGE RATE


100002000030000400005000060000700008000090000

Actual IncomeQualifying IncomeHigher Qualifying Income

VERY CYCLICAL VACATION HOME SALES(50% DECLINE AND 100% INCREASE)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

200,000

400,000

600,000

800,000

1,000,000

1,200,000

NEW HOME SALES – STILL SUPER LOW

(75% DECLINE AND 60% GAIN)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

SINGLE-FAMILY HOUSING STARTS – GROSSLY INADEQUATEThousand units

2000 - Jan 2001 - Jul 2003 - Jan 2004 - Jul 2006 - Jan 2007 - Jul 2009 - Jan 2010 - Jul 2012 - Jan 2013 - Jul 2015 - Jan0

200400600800

100012001400160018002000

RISING SHARE OF PRICEY NEW HOMES

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

100

200

300

400

500Under $200,000 $200,000 range Over $300,000

NEW HOME PRICE VS. EXISTING HOME PRICE

2005 - Jan 2006 - Oct 2008 - Jul 2010 - Apr 2012 - Jan 2013 - Oct 2015 - Jul$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

NewExisting

LOW INVENTORY MONTHS SUPPLY


2

4

6

8

10

12

14

U.S. POPULATION

19701975

19801985

19901995

20002005

20102015

20202025

20302035

20402045

20502055

20600

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

450,000,000

EVEN LOWER INVENTORY IN RELATION TO HOUSEHOLDS

2000 - Jan 2001 - Jul 2003 - Jan 2004 - Jul 2006 - Jan 2007 - Jul 2009 - Jan 2010 - Jul 2012 - Jan 2013 - Jul 2015 - Jan1.0

1.5

2.0

2.5

3.0

3.5

4.0

MULTIFAMILY HOUSING STARTS – SUFFICIENTLY ADEQUATE


100,000

200,000

300,000

400,000

500,000

600,000

RENTAL VACANCY RATE – LOW BUT STABILIZING

2000 - Q1

2000 - Q4

2001 - Q3

2002 - Q2

2003 - Q1

2003 - Q4

2004 - Q3

2005 - Q2

2006 - Q1

2006 - Q4

2007 - Q3

2008 - Q2

2009 - Q1

2009 - Q4

2010 - Q3

2011 - Q2

2012 - Q1

2012 - Q4

2013 - Q3

2014 - Q2

2015 - Q1

2015 - Q4

56789

101112

BIG DRIVER OF FUTURE INFLATIONRENTS RISING AT 7-YEAR HIGH

2000 - Jan2001 - Oct 2003 - Jul 2005 - Apr2007 - Jan2008 - Oct 2010 - Jul 2012 - Apr2014 - Jan2015 - Oct-1012345

Renters' Rent

NO CPI INFLATION – YET, BUT HIGHER FUTURE INFLATION WITH NUDGE RATES HIGHER

2000 - Jan 2001 - Oct 2003 - Jul 2005 - Apr 2007 - Jan 2008 - Oct 2010 - Jul 2012 - Apr 2014 - Jan

-3-2-10123456

RELIEF ON RENT?• If higher rent then higher inflation

and higher mortgage rates

• If lower rent than lower inflation and steady mortgage rates

WIDENING METRO HOME PRICES(640% VS. 241% GROWTH FROM 1980)

1980 - Q1 1983 - Q2 1986 - Q3 1989 - Q4 1993 - Q1 1996 - Q2 1999 - Q3 2002 - Q4 2006 - Q1 2009 - Q2 2012 - Q3 2015 - Q40

100200300400500600700800900

San Francisco Indianapolis

$ thousand

SAN FRANCISCO AREA OUTMIGRATION• 47,894 out of SF County• 37,378 out of San Mateo

County• 73,925 out of Santa Clara

County• 71,551 out of Alameda County

• Seattle• Portland• Boise• Salt Lake City• Denver• Austin• Raleigh

WIDENING JOBS MOBILE AND CHARLESTON SC


In thousands

BOEING AIRPLANE MADE IN CHARLESTON

WIDENING JOBS NASHVILLE AND MEMPHIS


1000In thousands

WIDENING JOBS GRAND RAPIDS AND FLINT


400420440460480500520540560

In thousands

JOBS(8 MILLION LOST … 14 MILLION GAINED)

2000 - Jan 2001 - Dec2003 - Nov2005 - Oct 2007 - Sep2009 - Aug 2011 - Jul 2013 - Jun2015 - May120,000

125,000

130,000

135,000

140,000

145,000In thousands

TOP AND BOTTOM STATES FOR JOBSThe Best % Gain in 12 months

Idaho 3.8

Utah 3.5

Nevada 3.4

Florida 3.0

Washington 3.0

California 2.9

South Carolina 2.9

Oregon 2.7

Arizona 2.3

The Worst % Gain in 12 months

Wyoming 0.2

Oklahoma 0.1

Louisiana -0.4

West Virginia -1.8

North Dakota -2.0

STATE LEVEL EMPLOYMENT

HOME BUYER TRAFFIC

JOBS IN NORTH DAKOTA


In thousands

JOBS IN PUERTO RICO


850

900

950

1000

1050

1100

1150In thousands

WHO’S ON DECK AFTER PUERTO RICO?States (worst and best) Unfunded Liability %

Illinois 57%

Kentucky 50%

Connecticut 47%

Louisiana 44%

New Hampshire 43%

Tennessee 8%

North Carolina 5%

South Dakota 4%

Washington 2%

Wisconsin 0%

BIGGEST LIES OCCUR … • After Fishing

• During a War

• Before an Election

FEDERAL DEBT … CUMULATIVE ( $ MILLION; DEBT HELD BY PUBLIC EXCLUDING

INTRA-GOVERNMENTAL HOLDINGS)

2001 - Jan 2002 - Dec 2004 - Nov 2006 - Oct 2008 - Sep 2010 - Aug 2012 - Jul 2014 - Jun0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

QUANTITATIVE EASING

2001 - Jan 2002 - Oct 2004 - Jul 2006 - Apr 2008 - Jan 2009 - Oct 2011 - Jul 2013 - Apr 2015 - Jan0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

Bonds Held at Federal Reserve

$ million

NEGATIVE INTEREST RATES … GOOD-BYE BEN?

HEALTHIER HOMEOWNERS

BORROWERS NOT DEFAULTING – ESPECIALLY VETERANS(SERIOUS DELINQUENCY RATE)

2005 - Q1

2005 - Q3

2006 - Q1

2006 - Q3

2007 - Q1

2007 - Q3

2008 - Q1

2008 - Q3

2009 - Q1

2009 - Q3

2010 - Q1

2010 - Q3

2011 - Q1

2011 - Q3

2012 - Q1

2012 - Q3

2013 - Q1

2013 - Q3

2014 - Q1

2014 - Q3

2015 - Q1

2015 - Q3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

All Mortgages

VA Mortgages

RISING HOUSING WEALTH

2000 - Q1

2000 - Q4

2001 - Q3

2002 - Q2

2003 - Q1

2003 - Q4

2004 - Q3

2005 - Q2

2006 - Q1

2006 - Q4

2007 - Q3

2008 - Q2

2009 - Q1

2009 - Q4

2010 - Q3

2011 - Q2

2012 - Q1

2012 - Q4

2013 - Q3

2014 - Q2

2015 - Q1

2015 - Q4

0

5000

10000

15000

20000

25000

Real Estate ValueMortgage Debt

$ billion

MORTGAGE RATES SAY TODAY’S HOMEBUYERS ARE LUCKIEST IN A

GENERATION

1971 - Jan 1976 - Jul 1982 - Jan 1987 - Jul 1993 - Jan 1998 - Jul 2004 - Jan 2009 - Jul 2015 - Jan02468

101214161820%

BUT UNLUCKIEST IN BECOMING HOMEOWNERS

1970 - Q1 1976 - Q1 1982 - Q1 1988 - Q1 1994 - Q1 2000 - Q1 2006 - Q1 2012 - Q16061626364656667686970

%

STUDENT LOAN …NAR-ASA STUDY IMPLIES 5 YEAR DELAY

(IN $BILLION)

2006 - Q1

2006 - Q3

2007 - Q1

2007 - Q3

2008 - Q1

2008 - Q3

2009 - Q1

2009 - Q3

2010 - Q1

2010 - Q3

2011 - Q1

2011 - Q3

2012 - Q1

2012 - Q3

2013 - Q1

2013 - Q3

2014 - Q1

2014 - Q3

2015 - Q1

2015 - Q3

0200400600800

100012001400

HOMEOWNERSHIP PARTICULARLY LOW FOR MINORITY HOUSEHOLDS

White Black Hispanic Other ?0

1020304050607080 72.1

41.5 45.353.0

%

HOMEOWNERSHIP PARTICULARLY LOW FOR MINORITY HOUSEHOLDS

White Black Hispanic Asian ?0

1020304050607080 72.1

41.5 45.353.0

%

TUITION COSTS AT HARVARD?

FORECAST

ECONOMIC FORECAST2014 2015 2016

Forecast2017

Forecast

GDP Growth 2.6% 2.1% 1.6% 2.2%

Job Growth +3.0 million +2.6 million +1.6 million +2.2 million

CPI Inflation 1.6% 0.3% 1.7% 3.0%

10-year Treasury 2.6% 2.1% 2.1% 2.8%

HOUSING FORECAST2014 2015 2016

Forecast2017

Forecast

New Home Sales 437,000 500,000 540,000 600,000

Existing Home Sales 4.9 million 5.3 million 5.4 million 5.5 million

Median Price Growth

+ 5.7% + 6.8% +4.5% 3.2%

30-year Rate 4.2% 3.9% 3.9% 4.6%

REALTOR® MEMBERSHIP

200020012002200320042005200620072008200920102011201320142015700,000800,000900,000

1,000,0001,100,0001,200,0001,300,0001,400,0001,500,000

2016 PRESIDENTIAL ELECTION

STRONG FEELINGS, FOR AND AGAINST

POLLS: PEOPLE DO NOT LIKE TRUMP OR CLINTON!

SAY NO TO DEMOCRACY AND YES TO PRIVATE PROPERTY RIGHTS?

Singapore -

– Had no Democracy– Higher per capita income than U.S. – Futuristic city– English: official language– Strong private property rights

protection

REALTORS® BELIEVE IN DEMOCRACY AND PROPERTY RIGHTS

THE HONORABLE ELIZABETH WARREN

Senator, (D – Massachusetts)

Residential Issues and Trends Forum 2016, Washington DC

Real Estate

Transcript of Residential Issues and Trends Forum 2016, Washington DC